Earlier this month, Republican lawmakers introduced a bill that would permanently slash property taxes by billions of dollars.
House Speaker Matt Huffman isn’t ruling out the possibility that the proposal may be tucked into the state budget. And that’s freaked out local government officials and public safety and teachers’ unions as budget season comes to an end ahead of a June 30 legal deadline.
House Bill 335 would eliminate what’s called “inside millage” – the portion of property taxes that local governments can implement without a vote of the people. While legislative researchers haven’t yet released an official price tag for the still-new proposal, local government groups estimate it would cut taxes by more than $3 billion. That would blow an equal-sized hole in the budgets for public schools, county governments, libraries, fire districts and other public entities that rely on property taxes for funding.
Governments could make up for the revenue loss by trying to raise other types of taxes – some of which require voter approval, some of which don’t. The bill’s sponsor, freshman state Rep. David Thomas of Ashtabula County, has said he envisions cuts or government consolidations to also be part of the equation.
Asked about the measure on Wednesday, Huffman refused to say whether the HB 335 could land in the state budget bill. He did say it’s the most “draconian” of the various menu options the legislature is considering to address “the property tax problem.”
“I don’t want to say we’re not going to do it, we are going to do it,” Huffman said. “But I think it’s at one end of the spectrum.”
But Senate President Rob McColley, the leader of the other legislative chamber involved in budget talks, threw cold water on the idea on Wednesday.
“Our caucus, I don’t believe is supportive of the elimination of inside millage,” McColley said, adding other elements of the bill may find their way into law.
Read more about other property tax changes in the budget, and a legislative hearing that grew heated on Wednesday, here.
Here are some of the other property tax changes currently in the budget:
- Eliminating “replacement” levies and emergency levies as options for schools and other local governments
- Requiring a two-thirds vote from a school board, rather than a simple majority, to place a school levy request on the ballot
And then there’s the major proposal – requiring school districts to issue a property tax refund if their reserve funds rise above a certain threshold. Lawmakers are haggling over the exact “carryover cap,” with about a $2.5 billion gap existing between House and Senate versions.
Lobbyists for local governments and public employees unions are sounding the alarms, including via local media. They’re also trying to figure out if HB335 is really likely to end up in the budget, or if it’s just being used as a foil to make another proposal to seem more reasonable in comparison, like the carryover cap idea. House Democrats put together a news conference this week denouncing the bill as part of a broader flash lobbying effort.
“I put the chances at 50-50,” said Kent Scarrett, executive director of the Ohio Municipal League. Some Republicans privately think its chances are worse than that.
Scarrett and other groups, like the Buckeye State Sheriff’s Association, the Ohio Fraternal Order of Police and the Ohio Mayor’s Alliance, say the change would set off a cascade of levy requests and a cut in essential services.
Several of them sent representatives to testify in Columbus on Wednesday. Tempers flared a bit in the House Ways and Means Committee, when Warren County Auditor Matt Nolan, a Republican, during his testimony called the proposal “the single largest attempt to defund the police in Ohio’s history.”
After Republican members complained, Nolan said he intentionally used “ bombastic language” that in part reflected how the proposal, which didn’t come up during an exhaustive set of hearings on property taxes last year, suddenly emerged near the end of budget season.
“I thought your comments on defunding the police were way out of line,” said state Rep. Steve Demetriou. “And you acknowledge that you’re using politically charged language on an issue that shouldn’t be political.”
Meanwhile, anti-tax advocates praised the proposal, calling it a needed update to Ohio’s property tax system. Lawmakers regularly describe rising property taxes, set off by the property value increases that followed the coronavirus pandemic, as the number-one concern they hear about from constituents.
“Voters want relief,” said Hannah Kubbins with Americans for Prosperity. “So much that we have a constitutional amendment campaign out there collecting signatures.”
